TORONTO, April 2 (Reuters) - Canada's Labrador Iron Mines Holdings sought court protection from creditors on Thursday, making it the latest victim of a high-stakes battle for market share among major producers that has sent iron ore prices tumbling and crippled small players.

The Toronto-based company, which owns assets in the iron-ore-rich Labrador trough in Eastern Canada, mothballed its operations last year and is now seeking to complete a restructuring so it can eventually resume operations.

"We're trying to focus on restructuring to stay in business. This is not a liquidation and get-out-of-town situation," Labrador Iron Chief Executive John Kearney said in an interview.

Iron ore prices hit new lows this week due to lingering concern over a supply glut and weak steel demand in China, the world's top consumer of both iron ore and steel.

Despite weak demand, the world's largest iron ore miners Vale, Rio Tinto and BHP Billiton have kept up production to protect market share.

Last week, Australia's Fortescue Metals called on iron ore miners to cap production in the hope of reversing the dramatic fall in prices.

The price collapse to $49 a tonne .IO62-CNI=SI has weighed heavily on Canadian miners. In January, Cliffs Natural Resources sought creditor protection in Canada, just months after it ceased production at its Bloom Lake iron ore mine in the Labrador trough in Quebec.

Labrador Iron (LIM), which voluntarily delisted its shares from the Toronto Stock Exchange recently, said it intends to deploy a comprehensive restructuring plan that may include selling some noncore assets to fund operating costs or to help it secure interim debtor-in-possession financing.

LIM said it is confident it will be able to preserve its key assets, including its flagship Houston project in the Labrador trough, pending a price recovery.

LIM said it is continuing to negotiate a potential support arrangement with RBRG Gerald Metals, an existing creditor and an offtake customer. If successful, that may provide working capital financing to fund its ongoing corporate activities.

The Canadian company also said its joint-venture partner, Tata Steel Minerals Canada, has exercised its option to buy LIM's remaining interest in the Howse project, which is also located in the trough, for C$5 million ($4 million).